Marketed as a ‘pride of ownership trophy asset,’ the largest collection of commercial properties in Pacific Palisades is being sold to a buyer, who several sources indicate is billionaire real estate developer Rick Caruso. On Friday, tenants of Pacific Palisades Properties received estoppel certificates’documents designed to give a prospective buyer information about the lease agreements between the current landlord and tenants. Commercial real estate estoppel certificates are usually seen when the property is in escrow. The 2.77 acres of property on Swarthmore Avenue and Sunset Boulevard, which was placed on the market in early October via CBRE Group by the landlord group Pacific Palisades Properties, fetched somewhere between $30 million to $40 million, said Palisadian-Post sources. ’We are not in a position to comment on that yet,’ said Liz Jaeger, vice president of Caruso Affiliated, who did not deny that her firm was involved or interested in the purchase. Caruso’whose projects include The Grove at Third and Fairfax, The Commons in Calabasas and the luxurious 8500 Burton Apartments on La Cienega’has reportedly met with executives of Trader Joe’s. Sources said that Caruso might be planning to build a smaller version of the popular market by tearing down the vacant U.S. Bank property, the medical offices on the second floor of that building, and the former Office Supplier and Nest Egg spaces (also empty), all on Sunset. The buyer would also own the adjacent outdoor parking lot behind Swarthmore and Monument that could be developed into additional parking and commercial uses. Norman Kulla, Councilman Bill Rosendahl’s senior legal advisor, said that Bryce Ross, vice president of acquisitions and development at Caruso Affiliated, visited the Councilman’s office in regards to the Village properties. ’Our offices were very excited and greatly encouraged to hear what they had to share,’ Kulla said. ‘They talked about enhancing the area and being non-invasive.’ ‘ Kulla said he wasn’t aware of a confirmed sale. ‘You should ask them about the details,’ he said. When asked about the sale to Caruso, Ross said, ‘No comment.” A confidential marketing report by CBRE included a projected redevelopment plan for the triangular parking lot bordered by Swarthmore and Monument (with a one-way alley as access), which called for a ground floor of retail and ‘two levels of residential multi-family units,’ with approximately 115 units at 900 sq. ft. each. Since 2006, a number of Palisades Properties’ tenants on Swarthmore and Sunset have gone out of business because of high rents and a struggling economy. Six of these deteriorating spaces have remained vacant for years. Yet according to CBRE’s report, the rents are projected to double in the next 10 years. These high estimates had many people fearing that an outside developer would come in and buy the property in the hopes of constructing a large residential/commercial development that would change the character of the Village. In fact, one source said rumors of a large developer from China who was interested in the property prompted some local tenants to court Caruso into making the purchase. ’Caruso agreed to meet with the group,’ said the source, who did not elaborate and wished to remain anonymous. Tenants were excited to hear that Caruso might be the mystery buyer. Steve Soboroff, a local business leader and real estate developer, said ‘On the one hand it doesn’t make any sense for the buyer to be Caruso. On other hand, it makes perfect sense because he can get things passed in the Palisades that no one else can.’ ’I think [if the buyer is Caruso] it would take away the argument that the character of the Village would be impacted,’ Soboroff said, which is a sentiment shared by other Palisadians, who believe that Caruso would bring much-needed vitality to the business district. Sources said the 14 co-owners who make up the landlord group Pacific Palisades Properties are eager to finalize the sale by the end of December to avoid a possible major hike in the capital gains tax in 2013. If they are still in negotiations with Caruso or another buyer this week, they must act with unaccustomed haste. The entire portfolio includes the entire east side of 1000 Swarthmore Avenue (from Bentons to City National Bank), all of the west side from Monument Street to Intima Lingerie, the open-air parking lot along Monument and three vacant properties on nearby Sunset Boulevard, including the former U.S. Bank (which is vacant but the bank is still paying rent) and the former Office Supplier.
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